Welcome to the new academic year of 2009-2010. I especially want to
welcome the 16 new tenure-track faculty and students who have just
joined us. To the returning faculty, staff and students, it is good
to have you back. I like to start these remarks with good news and
for this year it is that we have an approved State budget. There have
been years where we began the school year without one. The bad news
is that it is a terrible, lousy, and unfair budget. And the worst news
is that this might not be the last of the bad years as the full effect
of this yearís cuts will not be felt until 2010-11 when the federal
stimulus funds are expected to dwindle or disappear. Next yearís budget
is already expected to be about $8 billion in deficit. The economic
recovery is still at least two years away, but the need for funds now
is urgent.

California is in terrible financial straits, the worst it has been
in the last three decades and it will take years for conditions to
improve. This past February a two year budget agreement was reached
and it resolved a $15 billion deficit; but just a few months later
the State found itself in a much greater deficit having increased to
$26 billion and with revenues declining at an alarming rate. After
much negotiating and posturing, a budget agreement was reached at the
end of July. This budget is full of suffering and it is inadequate
to cover the needs of the people of this state. There are major spending
cuts, but there are also accounting gimmicks, fund shifts, borrowing,
too-optimistic revenue projections and significant amounts of one-time
federal stimulus money. Needless to say that the financial woes that
afflict California have not disappeared; as matter of fact, even at
this late stage, about $500 million in line item vetoes to health and
welfare programs made by the Governor just before signing the budget
bills are being challenged in court. Borrowing from local governments
and redevelopment agency funds is also being challenged. If these court
challenges are successful and revenues do not materialize as predicted,
this could result in even larger reductions, including to education,
at mid-year. I do not tell you this to frighten you; rather to give
you information you need to know. The challenges will be many over
the next two years or so, and we will be sharing the pain in order
to persevere.

Californiaís fiscal and political structures leave it extremely vulnerable
to changes as a result of the business cycles. Different from most
other states, our tax system depends very heavily on personal income
taxes. According to The Press Democrat in August of this year, ìSince
1950, income taxes have grown from 11% of the stateís tax revenue to
about 50% today. In recent years the stateís wealthiest 1% have generated
the bulk of thatóroughly half of the total income tax take, and one
fourth of the stateís overall tax revenue.î (The Press Democrat,
August 11, 2009) In other words, we are too heavily dependent
on few millionaires to fund the state, and their income fluctuates
widely since it is based on capital gains. In good times it is great,
but in bad times it is terrible, and these are bad times. Dan Walters
of the Sacramento Bee said in July, ìThe state rides a roller coaster
of revenue that soars when the economy jumps and plummets when it sours,
leading to binges of spending and tax cuts, followed by deficit hangovers.î
(Dan Walters, The Sacramento Bee, July 28, 2009)

If you add to the tax system a political system that protects the
political partiesí status-quo in the Legislature, term limits, a two-third
requirement for budget approval, inflexible government spending dictated
by propositions and court orders, and the inordinate influence of special
interests, it is no wonder we are in bad shape. Perhaps, these difficult
times will make it possible to enact some important reforms but this
will take time and more importantly it would require a great deal of
the political will that has been lacking in California for decades.
We will see more political competition for the seats in the Legislature
by 2012. There is a Commission on the 21st Century Economy that has
been charged to recommend changes in the tax structure to smooth the
revenues over years, and a new citizensí commission entitled California
Forward which aims to re-write the Constitution. We will see if these
changes are possible.

As it relates to higher education there was very little or no debate
in the Legislature and by the Governor about budget cuts and their
consequences. The magnitude of the budget cuts to us was pretty well
settled early on and the only reason they were not increased any further
was the limitations set by the ìmaintenance of effortî provisions in
the federal stimulus legislation. Simply put, we do not have strong
advocates in the legislative arena in Sacramento. Democrats wanted
to preserve as much as possible the programs that provide the social
safety network for the needy of California and the Republicans were
adamant about no new taxes. K-14 was promised re-payments of budget
cuts in future years but not so for the CSU and UC. We were promised
the restoration of $305 million of one-time cuts, but the health of
the economy will dictate if that promise can be fulfilled. Fortunately,
funding for the Cal Grant programs was maintained despite an earlier
proposal by the Governor to eliminate them.

In the end, CSU was cut by $564 million. The CSU is now funded by
the State at about 20% less than it received in 1999, ten years ago,
despite now serving 100,000 more students. Had it not been for the
federal stimulus funds, the cuts would have amounted to almost $1.3
billion. The $564 million reduction does not include the $66.3 million
in permanent cuts that were made in the February budget or the $40.5
million of new mandatory costs for a total of almost $671 million.
Support per FTES has decreased $932 in one yearófrom $8,466 in 08-09
to $7,534 in 09-10.

Chancellor Reed, based on his 40-year career in state public service
and education, said, ìThere has never been such a steep drop in state
support in such a short amount of time. We are in the midst of a financial
meltdown and need to take immediate action in order to preserve our
institutions.î (CSU Press Release, July 21, 2009) There is no doubt
that this massive cut has a severe impact on student access, affordability,
and educational quality. It deeply affects every employee, it puts
in doubt the viability of the educational opportunities of future students,
and it compromises the economic and social prosperity of California.

In order to meet this financial meltdown, a number of actions have
been taken. The goals for closing the budget gap of $671 million were
to serve as many students as possible with quality instruction and
related services, to protect as many jobs as possible, to preserve
the Universityís financial integrity, and to plan beyond the 2009-10
fiscal year. To this effect the Board of Trustees took the following
actions:

Reduced labor costs by establishing two days a month furlough for
a year for most employees as 85% of the CSUís budget is in personnel.
Increased undergraduate student fees by $672 per year for undergraduates.
A third of the increased fee revenues are set aside for financial aid.
Called for a reduction in enrollment by 40,000 by 2010.
Closed student enrollment for the Spring semester, and
Reduced another $163 million in campus expenditures through a hiring
freeze on non-essential positions, the elimination of vacant positions,
the cancellation of non-critical equipment and supplies purchases,
and travel restrictions.

There are no good choices here. All of these actions create pain that
is shared by students, faculty, staff, and administration.

In terms of the State University fee increase, while regrettable during
these difficult economic times for of our students and their families,
about 47% of our students will experience no impact because one third
of the revenue goes directly to financial aid. As a system, this offsets
the increase for our neediest 187,000 students, those coming from families
making $75,000 or less. In addition, thanks to the increase in the
tax credit and the lowering of the income eligibility threshold, families
making up to $180,000 will be eligible to benefit from the tax credit
which also offsets the fee increase. Pell grants have increased to
a maximum of $5,350 a year for eligible students. The CSU is the largest
single institutional recipient of this federal financial aid receiving
an estimated $81 million a year for about 120,000 students. The CSU
remainsóby a significant differenceóthe lowest cost public university
system in the country.

Perhaps, the saddest consequence of the budget cuts is the restriction
in enrollment to 40,000 eligible students in these two years in order
to align enrollment with financial resources. This amounts to denying
access to students who would fill about six universities the size of
Sonoma State. Already we are seeing significant student reductions
at this campus and everywhere else. This comes at a time when more
new students than ever are eligible to come to the institutions of
higher education in California. Spring enrollment for new students
is unavailable despite the fact that first-time freshmen or those who
come to us as transfer students are prepared to enroll. Systemwide,
we usually enroll 35,000 new students in the Spring.

Limiting and denying access to Californians has detrimental consequences
for the individuals as well as the state. This is especially true when
it comes to minority students who are less represented in higher education
than their share of the population. According to a recently released
report by the Public Policy Institute of California, by the year 2025
more than 41% of the jobs in California will require at least a bachelorís
degree. At the present rate, barely a third of all Californians meet
that standard. By 2025 the shortfall will amount to a million workers.
According to the August 14, 2009 editorial in The Press Democrat, ìAt
the same time, the number of high school graduates will outnumber jobs
for people with that level of education.î The days of importing educated
and talented workers from other states and nations to service our increasing
technological economy and to do the research and development needed
to start new businesses is over, given the growth and development of
their own economies and the difficulties plaguing California.

The editorial appropriately points out that, ìThe ripple effects are
costly: higher unemployment means a bigger demand for social services.
A less educated work force means less personal income and, therefore,
less tax revenue for public services.î Economic theory tells us that
this is the time to increase the investments in education, but instead
we are drastically and dangerously reducing them. Even before the current
budget crisis, state support for the CSU had been declining and despite
the inadequate financial support the CSU manages every year to preserve
access to more than 400,000 students, keep tuition and fees the lowest
in the nation, and provide an outstanding level of educational quality
that results in more than 90,000 graduates every year. I am afraid
that we cannot continue doing all of that with the present level of
state support. California, for the sake of its future, must reinvest
in the CSU in order to strengthen its economy.

What does the budget reduction mean to Sonoma State University?

Our share of the reductions amount to $15.8 million, about 17% of
our General Fund support from the State. These reductions are met with
the following actions:

$5 million from the State University Fee increase, after the one-third
set aside for Financial Aid

$5.9 million as a result of the two-day per month furlough of most
employees

$4.4 million by reducing enrollment by 378 FTES. And,
$500,000 of reductions distributed to all the divisions

But behind these numbers there are real and unfortunate consequences
for all of us. There is shared pain.

The fee increase is real and affects a great number of our students
and their families. There is a price shock for a population that was
promised affordability, which for many meant little or no tuition/fees
costs. I often hear that, ìI paid only $50 a year just few years ago.î
That is what I paid in another state more than 40 years ago. But those
days are gone and will not come back. Still, fee increases mean less
money available for other needs and they mean more hours of work for
the great majority of our students who work while attending school,
and in some cases lead to greater debt. I also hear the valid complaint
that, ìI am paying more and receiving less.î True, there are fewer
class offerings, larger classes, and limits to the number of units
one can take. The Board of Trustees has issued a directive to examine
the academic progress of every student with more than 120 units and
if he or she has met the requirements for the degree, it will be issued.
I am afraid that the days of unregulated double and triple majors and
several minors are coming to a close. I am pleased to announce that
the degree audit feature of PeopleSoft for this campus will soon be
operative and the students and their advisors can easily see what progress
they are making toward graduation and what courses still need to be
taken to fulfill the requirements of the degree. SSU is a wonderful
bargain for the cost and the quality education we provide. Our reputation
is excellent and our graduates are most competitive in the market place.
They are proud of the education they receive here.

The furloughs are another instance of shared pain. They have two major
consequences. One is that there is a temporary salary reduction amounting
to 9.23%, but it does not affect health and retirement benefits. Still,
this monetary reduction for this year is a significant hardship for
everyone. The other consequence is the commensurate reduction in the
time available to get the job done at a time when there is an increasing
amount of work and fewer people to do it. The furloughs affect all
levels of the institution and we can expect complaints from students
and the public about things not getting done as well, or as much, or
as fast as they had been. This year the University will be closed 17
days including 6 Fridays in the Spring semester when traditionally
classes were held. During these ìState Budget Closure Daysî almost
no business will be transacted, including classes and library services.
These closures will surely send a message to the people and decision-makers
of California of the dire consequences of the severe budget reductions
imposed on the CSU.

While the need for the reduction in labor costs was imperative, I
am so proud of the actions taken by the staff and faculty who voted
for the furloughs in order to save jobs and classes. Had it not been
for the furloughs, 15% of all classesóabout 225 at SSU (22,000 course
sections systemwide)ówould have been cancelled. Unfortunately, some
classes will be cancelled anyway, but not as many, and others may have
to make adjustments to the days and times in which they meet.

As I mentioned before, one of the most tragic consequences of the
budget cuts is the reduction of enrollment by 40,000 students in the
next two years. For Sonoma State University this is a reduction of
450 FTES from our previous target of 7,500 FTES. We expect to reduce
this yearís enrollment by about 372 FTES and another 78 FTES next year
to meet a new target of 7,050 FTES. This is required in order to align
student enrollment with the reduced level of state funding and to be
able to maintain educational quality and services to the students.
All campuses are impacted and students are encouraged to apply as early
as possible, by October 1, for the fall semester of 2010.

The additional half million dollar reduction to the divisions is being
met with decreases in operating expenses, reducing subsidies to self-supported
funds, and further reductions in personnel costs.

Where do we go from here?

Professor Mike Visser recently commented in Senate-Talk (August 3,
2009) that, ìThe economy will recover, but this time it will be slow
and painful. In the meantime we have been stripped bare. This represents
for us an opportunity to take stock of what we really value, what we
are good at and what we are not, and what we want the CSU to look like
in the future. This means seriously considering changes to how we organize
ourselves and to how we do business. If we capitalize on this opportunity,
we can have a great deal more influence over our future than has been
the case in the past. A key component to achieving additional autonomy
would be reducing our reliance on state funds, so that when the next
recession does come, we can afford to continue letting students in
rather than shutting them out.î

First, the State of California must restore the funding per FTES to
at least the 2008-09 level of $8,500 and honor the commitments to the
restoration of $305 million vetoed in this budget. It also must restore
the Compact agreement. These are required actions needed to prevent
the further deterioration of the university system which provides the
human and intellectual talent which is the engine of economic and social
growth and prosperity for California.

Second, we must change what we do and how we do it at all levels of
the University. Mohamed Qayoumi, a colleague President at another CSU
campus has pointed out that, ìBalancing the budget for a campus or
the system should involve options for both revenue enhancement or substitution,
as well as cost reduction. Cost reduction can come from greater efficiencies
and from reducing the scope of what we do. Doing less means exactly
that.î (Perspectives on CSU Budget Gap, July 24, 2009)

There are efficiencies to be gained in the area of information technology
by consolidating operations and applications hosting and support and
staff services as well as sharing expertise and by adopting projects
and technologies that provide cost savings opportunities. The advent
of technological capabilities such as cloud computing, cloud storage
and new buying clubs present an excellent opportunity for the CSU and
its campuses to contain and even reduce the increasing costs of information
technology including the use of energy.

Another area where changes could result in savings is in our business
processes, such as purchasing, accounts payable and receivable, financial
aid processing, payroll transactions, and many others. Most of these
processes are characterized now in variations across campuses rooted
in the ìfossilized organizational mythî that each campus is so different
from another. These processes are basically the same across the CSU
and should be treated as commodities where standardization and economies
of scale results in lower costs. The Common Financial System being
developed now is a move in the right direction. Similarly, there is
a need for a Common Human Resources System and a Common Student Services
System.

And third, but more important in the long-run, there are areas for
gains in efficiency in the academic arena. For instance, as President
Mohamed Qayoumi, said, ìOne fundamental change will be moving from
a ëseat-timeí model to a ëproficiency-basedí model where using more
sophisticated assessment tools could help to measure the studentsí
competency rather than the number of credits and/or faculty contact
hours.î (Perspectives of CSU Budget Gap, July 24, 2009). Another area
for consideration would be increasing the use of technology in the
teaching and learning process where face-to-face contact between the
faculty member and the students is mixed with technological engagements
and projects which would enhance access and learning. These are the
technologies that our graduates are experiencing in the workplace and
they should be academically prepared to use them and become critical
users of information.

It is time to clarify, examine and prioritize all of our activities,
programs and services while keeping in perspective the long-term future
of the university. We must not make short-term decisions that result
in unintended negative consequences, but relying on variations of across-the-board
reductions is not sustainable. The reality is that we are operating,
and for the foreseeable future will continue to operate, under conditions
of inadequate financial support.

I am asking that every division establishes and examines:

What they do

The reasons for doing it

How it is done

How well it is being done including recommending areas for improvement

How central it is to the mission of the University

What priority it should have

Then these division plans will come together for examination and discussion
with the goal of formulating and adopting of a University-wide Priority
and Allocation Plan based on the recently adopted University Strategic
Plan. I am asking the University Strategic Planning Committee co-chaired
by Provost Eduardo Ochoa and Vice President Larry Furukawa-Schlereth
to coordinate this effort.

Despite these extremely difficult times when we all are sharing pain
we must persevere. The University is too important and key to the lives
of present and future citizens of California, as well as to other states
and nations, to give up and abdicate our responsibility in transforming
and improving lives, communities and the state and nation. It is through
education that we better ourselves, our families and our communities.
The history of higher education is one of perseverance through dark
ages, through war and pestilence, through ignorance and depressions,
through apathy and bigotry. We are the second longest human institution
in continuous existence and we plan to be here for many more years.
We should not only survive but even thrive and prosper in the years
to come. What we do is important and transforming. It is a noble enterprise
in which all of us have many great contributions to make.